Sample Report
Due Diligence Report: Mike's Auto Repair
Generated March 15, 2026
Documents Analyzed
Executive Summary
Mike's Auto Repair is a profitable, established business with strong earnings and a loyal customer base. Two risks require attention before closing: high fleet customer concentration and a lease expiring in 18 months.
Financial Health Scores
Revenue Analysis
Revenue grew 9.7% year-over-year on average.
Fleet accounts (3 companies) represent 35% of total revenue. This is above the 25% concentration threshold.
Retail walk-in revenue is stable with low seasonality.
35% of revenue comes from 3 fleet accounts. Loss of the largest account (DenverFleet LLC, 18% of revenue) would reduce SDE below the asking price multiple threshold.
True Earnings (SDE Reconstruction)
| Line Item | Amount |
|---|---|
| Reported Net Income | $95,400 |
| ADD-BACKOwner Salary | +$82,000 |
| ADD-BACKOwner Health Insurance | +$14,200 |
| ADD-BACKOwner Vehicle Lease | +$8,400 |
| ADD-BACKPersonal Cell Phone | +$2,100 |
| ADD-BACKOne-time Legal Fees (2024) | +$11,800 |
| ADD-BACKDepreciation (non-cash) | +$6,200 |
| Total SDE | $220,100 |
Valuation Range
The asking price of $375,000 represents a 1.7x SDE multiple. This is slightly above fair value but within reasonable range for a business with 12 years of operating history.
SDE Multiple
$352K
EBITDA Multiple
$341K
DCF (5-year)
$367K
Risk Radar
Key Risks and Mitigation
35% revenue from 3 fleet accounts. Mitigation: Request 2-year service contracts from fleet customers before closing. Negotiate an earnout tied to fleet retention.
Current lease expires in 18 months with no renewal option documented. Mitigation: Negotiate lease renewal or new 5-year lease before closing. Factor potential rent increase into projections.
Mike handles all fleet account relationships personally. Mitigation: Structure a 90-day transition period. Have Mike introduce the buyer to all fleet contacts before handover.
Negotiation Leverage
- 1Ask for a price reduction to $350,000 based on customer concentration risk
- 2Request fleet customer contracts as a closing condition
- 3Negotiate a 90-day seller transition period (currently not included)
- 4Structure 10 to 15% as a seller note tied to customer retention metrics